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IN THE HIGH COURT OF KARNATAKA AT BANGALORE
Niazahmed S. Dafedar and P. Puttaraju, JJ.
Centum Electronics Limited (Earlier Solectron Centum Electronics Limited) —Appellant
Vs.
State of Karnataka —Respondent
Sales Tax Appeal Nos. 89 to 135 of 2012
Decided on : 13-08-2013
VAT - Tax Exemption - KVAT Act, 2003, CST Act, 1956 - Section 9(2), Section 39(1), Section 47 - Notifications under KVAT Act and CST Act - The court discussed the entitlement of tax exemption and refund claims under the KVAT Act and CST Act, the forfeiture of excess tax collected, and the interpretation of relevant notifications. The court upheld the forfeiture of excess tax collected and dismissed the appeals.
Fact of the Case:
The appellant, a company engaged in the business of manufacturing and sale, filed appeals challenging reassessment orders under the KVAT Act and CST Act. The appellant sought tax refund and challenged the forfeiture of tax collected by mistake.
Finding of the Court:
The court found that the appellant had collected tax in contravention of the CST Act notification and upheld the forfeiture of the excess tax collected. The court dismissed the appeals filed by the appellant.
Issues: The issues involved the appellant's entitlement to tax exemption and refund under the KVAT Act and CST Act, the forfeiture of excess tax collected, and the interpretation of relevant notifications.
Ratio Decidendi: The court held that the appellant was not entitled to collect tax on inter-State sales under the CST Act notification and upheld the forfeiture of the excess tax collected. The court applied the doctrine of unjust enrichment to support its decision.
Final Decision: The court dismissed all the appeals filed under the KVAT Act and CST Act, upholding the impugned orders of the FAA and directing compliance with the regulations.
P. Puttaraju—These forty-seven (47) appeals are filed under Section 63 of the Karnataka Value Added Tax Act, 2003 (for short, 'the Act'). The same are directed against the appeal order passed by the Joint Commissioner of Commercial Taxes (Appeals-5), Bangalore (for short, as 'FAA') in Case Nos. VAT:AP:732 to 767/09-10 and CST:AP:159 to 169/09-10, dated 28-1-2012. The FAA has upheld the reassessment orders concluded under the Central Sales Tax Act, 1956 (for short, 'CST Act' or 'Central Act') by the Assistant Commissioner of Commercial Taxes (Audit-57), DVO-5, Bangalore (for short, as 'AA') for the tax periods of 2005-2006, 2006-2007 and 2007-2008 vide orders dated 8-4-2009 and 24-8-2009 concluded under Section 9(2) of the CST Act as well as reassessment and forfeiture proceedings concluded under Section 39(1) and Section 47 of the Act. The FAA has also upheld the orders concluded by the AA under Section 47(3) of the KVAT Act forfeiting the excess tax collected. Even though, the first appeal under CST Act is only eleven (11) appeals and six (06) appeals under the KVAT Act, the appellant has filed thirty-six (36) appeals before this Tribunal, since the matters are interconnected with all the tax periods so far as law and facts are concerned because of input tax rebate carry forward done by the appellant in view of the refund claims made by him under both the Acts. The STAs bearing STA Nos. 89 to 124 of 2012 (36 appeals) are related to the KVAT Act, whereas, STAs bearing No. 125 to 135 of 2012 (11 appeals) are related to the Central Act. The Interim Applications I.A. Nos. I and II are related to the dispensation of the production of original impugned orders in view of the fact that the original appeal order and reassessment orders have been filed for the twelve tax periods of 2005-2006, whereas the copies are filed for the remaining tax periods under appeal under both the Acts. The same has been accepted by the Bench by disposing I.A. Nos. I and II while admitting the appeals on 13th February, 2012. The appellant has been granted stay by disposing of two more interim applications i.e., I.A. Nos. III and IV on 13th February, 2012 only following the directions given by the Hon'ble High Court of Karnataka in its judgment dated 8th July, 2009 in Writ Petition Nos. 18542 to 18545 of 2009 (T-RES).
2. The relevant facts and grounds Leading to these appeals in brief under KVAT Act, 2003 and the CST Act, 1956 are stated thus:
(i) The appellant is a company incorporated under the Companies Act, 1956 engaged inter alia in the business of manufacture and sale of 'Hybrid Micro Circuits' and a dealer registered under the KVAT Act and the CST Act.
(ii) The appellant has been granted eligibility certificate under the Information Technology Policy, 1997. The relevant notifications issued under the KST Act, 1957 and CST Act, 1956 are Notifications bearing No. FD 57 CSL 97(I), dated 21-8-1997 and FD 57 CSL 97(II), dated 21-8-1997 respectively. After the introduction of the Karnataka Value Added Tax Act 2003, the Government of Karnataka in order to continue the incentives and concessions provided to the existing industrial units falling under various industrial policies including the information technology policy has issued notifications under KVAT Act, 2003 vide Notifications No. FD 56 CSL 2005 (1, 2 and 3), dated 18th April, 2005 and Notification No. FD 56 CSL 2005 (4 and 5), dated 18th April, 2005 under CST Act, 1956 to continue the unavailed tax exemptions and deferment to eligible units subjected to conditions and restrictions prescribed therein. The appellant submits that the entitlement certificate is also issued in this regard by the concerned Joint Commissioner of Commercial Taxes (JCCT) (Admn.), Bangalore Division, Bangalore. This entitlement certificate is issued by virtue of powers vested with JCCT under Notification No. FD 56 CSL 2005 (1) , dated 18-4-2005. This particular notification is issued for the new industrial units who wer
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